Venture Capitalists Are Bugging Out

Munching Texas BBQ-flavored whole roasted crickets in the multimillion-dollar mansion of a Silicon Valley legend sounds like a wacky plot line from Silicon Valley, the HBO series.

But the potential of edible insects as a source of protein is driving start-ups like Aspire Food Group, which are thinking small to solve a big problem--world hunger—while creating a business that could eventually go public. John Chambers, the former Cisco Systems CEO whose venture firm, JC2 Ventures, has bet an undisclosed sum on Aspire, certainly thinks so. He excitedly passed me packets of crickets to consume from his hilltop home in Palo Alto, Calif.

"No one has commercialized harvesting insects," Mohammed Ashour, co-founder and Chief Executive of Aspire, which produces 25,000 pounds of edible crickets annually through a “hatch-to-batch” robotics farming process that incorporates big data, tells Barron's. About two dozen companies are vying for a piece of the edible insects market, which is expected to top $1.18 billion by 2023, according to Meticulous Research.

Has the Valley gone buggy? Yes. Arielle Zuckerberg, Mark’s sister, has invested in two grub start-ups: Bitty Foods, a San Francisco-based maker of cricket products, and Tiny Farms cricket farm in nearby San Leandro, Calif. On Shark Tank, Mark Cuban offered $100,000 to Chirps, which makes cricket-flour chips.

Aspire, which has created a vertical warehouse at its Austin, Texas, headquarters to mass-produce tasty crickets, in March acquired Exo, a maker of cricket protein bars. And it has secured several million dollars in funding. If it can keep pace with demand and ramp up manufacturing, it could well be on its way to becoming another tech unicorn, a start-up valued at more than $1 billion, Chambers predicts.

"We want to make crickets the next lobster," says Chambers, who also acts as a mentor to Ashour. They both insist there is a hunger for such edibles.

Based on my sampling of Texas BBQ crickets—they were quite tasty—there may be some bite to this market.

-- Jonathan Swartz